(a) F.W.Taylor
(b) Henry Fayol
(c) Lucas Pacioli.
(2) Funds Flow Statement and sources and application statement are:’
(a) Synonymous
(b) Antagonistic
(c) None of these.
1. Fixed Cost:
a. Changes with production
b. Never changes even if production capacity is doubled
c. None of the above
6. Verification includes:
a. Checking Vouchers
b. Examining audit report
c. None of the above
12. If a firm has paid super-tax, its partners may follow any one of the
following behaviours:
a. No need to pay income tax, even if the income exceeds the taxable limit.
b. Pay income tax, even if the income does not exceed the taxable income.
c. Pay income tax as required under the law.
(2) For preparing balance sheets prepaid expenses are shown as part of:
(a) Liability
(b) Equities
(c) Assets
(d) None of these
(4) Amount, cash, or other assets removed from business by owner is:
(a) Capital
(b) Drawings
(c) Assets
(d) None of these
(5) Under the diminishing balance method, depreciation amount is:
(a) Payment
(b) Receipt
(c) Expenditure
(d) None of these
(7) The business form(s) in which the owner(s) is (are) personally liable is (are) the:
(a) Partnership only
(b) Proprietorship
(c) Corporation only
(d) Partnership and proprietorship
(e) None of these
(14) The payment of rent each month for office space would:
(a) Decrease total assets
(b) Increase liabilities
(c) Increase owner’s equity
(d) None of these
(16) Which one of the following accounts would usually have a debit balance?
(a) Cash
(b) Creditors
(c) Accounts payable
(d) Salaries Expenses
(e) None of these
(4) At break-even point of 400 units sold the variable costs were Rs. 400 and
the fixed costs were Rs.200. What will be the 401 units sold contributing to
profit before income tax?
(a) Rs. 0.00
(b) Rs. 0.50
(c) Rs. 1.00
(d) Rs. 1.50
(e) None of these
(5) In considering a special order situation that will enable a company to make use
of currently idle capacity, which of the following cost will be irrelevant:
(a) Materials
(b) Depreciation
(c) Direct labour
(d) Variable factory overhead
(e) None of these
(6) A fixed cost:
(a) May change in total when such change is not related to changes in production
(b) Will not change in total because it is not related to changes in production
(c) Is constant per unit for each unit of change in production
(d) May change in total, depending on production with the relevant range
(e) None of these
(9) Expenses such as rent and depreciation of a building are shared by several
departments these are:
(a) Indirect expenses
(b) Direct expenses
(c) Joint expenses
(d) All of the above
(e) None of these
(16) A segment of the business that generates both revenue and cost is called:
(a) Profit Center
(b) Cost Center
(c) Cost driver
(d) All of these
(e) None of these
(1) Rent of the premises constitutes variable expenses for cost allocation:
(a) True
(b) False
(4) Principal and markup payment within one year constitutes long term liability
for disclosure in the balance sheet of a company.
(a) True
(b) False
(d) None of these
(1) The need for keeping a record of income and expenditure is a clear
and systematic manner has given rise to the subject of:
(a) Book keeping
(b) Accounting cycle
(c) Manufacturing
(d) None of these
(2) If proper books of accounts are not kept in a business the amount of profit:
(a) Can be ascertained
(b) Cannot be ascertained
(c) Easily ascertained
(d) None of these
(3) The stage under which transactions are recorded chronologically in the books
of accounts is called:
(a) Summarizing
(b) Classifying
(c) Recording
(d) None of these
(6) When goods are given away as charity or free samples, the purchases
account should be:
(a) Debited
(b) Credited
(c) Recorded in balance sheet
(d) None of these
(9) The payment side of the cash book is under cost by Rs. 200 when overdraft as
per bank statement is the starting point:
(a) Rs 200 will be deducted
(b) Rs 200 will be added
(c) Rs 400 will be added
(d) Rs 400 will be deducted
(11) Those liabilities which arise only on the happening of some event, are called:
(a) Current liabilities
(b) Contingent liabilities
(c) Outstanding liabilities
(d) Fixed liabilities
(12) Marshalling of balance sheet means:
(a) The ordering of its assets and liabilities
(b) The totaling of its assets and liabilities
(c) Excess of assets over liabilities
(d) None of these
(14) The provision for discount on creditors is often not provided in keeping
with the principle of:
(a) Materiality
(b) Consistency
(c) Conservatism
(d) Realization
(15) Which one of the following is not considered the permanent part of
the accounting record:
(a) Journal
(b) Trial Balance
(c) Balance sheet
(d) Final accounts
(16) A working paper which is prepared by the accountant for his own convenience
is called:
(a) Work sheet
(b) Cash flows statement
(c) Balance sheet
(d) Final accounts
(17) Any expenditure incurred to increase the profit earning capacity of the
concern is a:
(a) Revenue expenditure
(b) Capital expenditure
(c) Deferred revenue expenditure
(d) Capital expenditure
(20) Error due to wrong allocation as expenditure between capital and revenue
is regarded as:
(a) Error of omission
(b) Error of principle
(c) Compensation errors
(d) Error of commission
(2) In general, the accounts in the income statement are known as:
(a) Real account
(b) Contra asset
(c) Nominal account
(d) Unrecorded revenue account
(3) In general terms, financial assets appear in the balance sheet at:
(a) Face value
(b) Current cash value
(c) Cash
(d) Estimated future sales value
(4) A limited Co. sold marketable securities cost Rs. 80,000 for Rs. 92,000 cash. In
Co.’s income statement and statement of cash flows respectively, this will
appear as:
(a) A Rs. 12,000 gain and Rs. 92,000 cash receive
(b) A Rs. 92,000 gain and Rs. 8,000 cash receive
(c) A Rs. 12,000 gain and Rs. 80,000 cash receive
(d) A Rs. 92,000 sales and Rs. 92,000 cash receive
(5) Which of the following is least important as a measure of short term liquidity?
(a) Debtor ratio
(b) Current ratio
(c) Cash flow from operating activities
(d) Quick ratio
(6) Uzma Ltd. Net income was Rs. 4,00,000 in 2003 and Rs. 1,60,000,in 2004. What
percentage increase in net income must achieve in 2005 to off set the decline
in profits in 2004?
(a) 60%
(b) 150%
(c) 200%
(d) 70%
(12) At the time of admission of a new partner, goodwill raised should be written off
in:
(a) New profit sharing ratio
(b) Old profit sharing ratio
(c) Sacrificing ratio
(d) Gaining ratio
(13) A and B are partners in the ratio of 2:1. They admit C for ¼ shares who
contributes Rs. 3000 for his share of goodwill. The total value of the goodwill
of the firm is:
(a) Rs. 3,000
(b) Rs. 9,000
(c) Rs. 12,000
(d) Rs. 15,000
(14) Sales to Mustafa of Rs. 10,000 not recorded in the books would affect:
(a) Sales account
(b) Mustafa account
(c) Sales account and Mustafa Account
(d) None of these
(4) Assets would be overstated if necessary adjusting entry was omitted for:
(a) Expired Insurance
(b) Accrued Salaries
(c) Accrued Interest Earned
(d) None of these
(5) The book value of the depreciable asset is best defined as:
(a) The un-depreciated cost of the asset
(b) The price that the asset would fetch if offered for sale
(c) Accumulated depreciation of the asset since acquisition
(d) None of these
(7) A company has current ratio of 2 to 1 at the end of year 1. Which one of the
following transactions will increase this ratio?
(a) Sales of bonds payable at a discount
(b) Declaration of a 20% cash dividend
(c) Collection of a large account receivable
(d) None of these
(8) If sales increase by 10% from year 1 to 2 and cost of goods sold increases
only 6%, the gross profit on sales will increase by:
(a) 4%
(b) 10%
(c) 6%
(d) None of these
(10) which of the following amounts appears in both the income statement and
balance sheet?
(a) Net Income
(b) Accumulated depreciation
(c) Dividends
(d) None of these
(11) Both the accounts for depreciation expense and accumulated depreciation:
(a) Are closed at the end of the period
(b) Appear in the Adjusted Trial Balance Columns of the worksheet
(c) Appear in the Trial Balance Columns of the worksheet
(d) None of these
(15) Which of the following list of accounts is used to compute the cost of
goods sold?
(a) Purchases, inventory, and sales returns.
(b) Gross profit, purchase returns and carriage inward.
(c) Inventory, net sales and purchases
(d) none of these
(17) On April 1, Hassan & Company received and paid a Rs.700 bill for the advertising
done in March. In addition to this bill the company paid Rs. 6,100 during April for
expenses incurred in that month. Hassan & Company paid Rs.3,600 as salary to
employees for work done in April. Based on these facts, total expenses for the
month of April were:
(a) Rs.6,100
(b) Rs.6,800
(c) Rs.10,700
(d) None of these
(Bill of march Rs 6100 + Salary exp Rs 3600= Rs 9700 )
(18) Which of the following categories of accounts are closed at the end of
an accounting period?
(a) Temporary accounts
(b) Permanent accounts
(c) Personal accounts
(d) None of these
(19) A retail store had current assets of Rs.72,000 and a current ratio of 2 to 1.
The amount of working capital must have been:
(a) Rs.144,000
(b) Rs.108,000
(c) Rs.72,000
(d) None of these
4. While passing adjusting entries for what type of transactions expenses are
debited and assets are credited:
a. Accrued revenue b.
Accrued expenses c.
Unearned Revenue d.
Prepaid Revenue
8. A transaction caused Rs. 20,000 decrease in both total assets and total
liabilities. This transaction could have been:
a. Purchase of an asset for Rs. 20.000 cash
b. Asset costing Rs. 20,000 destroyed by
fire c. Repayment of Rs. 20,000 bank loan
d. Collection of Rs. 20,000account receivable
13. At the time of admission of a new partner, goodwill raised should be written
off
in:
a. New profit sharing ratio
b. Old profit sharing
ratio c. Sacrificing ratio
d. Gaining ratio
14. A and B are partners in the ratio of 2:1. They admit C for ¼ shares who
contribute
Rs. 3000 for his share of goodwill. Total value of the goodwill of the
firm is: a. Rs. 3000
b. Rs. 9000
c. Rs.
12000 d.
15000
15. Second hand machinery worth Rs. 10, 000 was purchased, repairing of the
machinery cost Rs. 1,000. The machinery was installed by own workers. Wage
for this being Rs. 200, the machinery account should be debited for:
a. Rs. 10,000
b. Rs. 11,000
c. Rs.
11,200
d. None of these
16. If net sales Rs. 100,000 cost of goods sold Rs. 55,000, administrative expenses
Rs. 5300, selling expenses Rs. 4375, Interest expense Rs. 500, the operating
profit is:
a. Rs.35325 (operating profit does not include interest income/expense
and Taxes)) b. Rs.45000
c. Rs.39700
d. Rs.34825
17. Which of the ratio best reflects a company’s ability to meet immediate
interest payment?
a. Debit ratio
b. Equity ratio
c. Times interest
earned d. None of these
18. Identify which items are subtracted from the list amount and not
recorded when computing purchase price:
a. Freight in
b. Trade discount
c. Purchase discount
d. Purchase return
19. Bonus payable only on the maturity of the policy is termed as:
a. Cash bonus
b. Reversionary bonus
c. Interim bonus
d. Bonus is reduction of premium
(xi) Which of the following accounts are not closed at the end of an
accounting period?
(a) Revenue accounts (b) Expense accounts (c) Drawing accounts (d) Asset accounts
(xii) Under periodic inventory system cost of good sold is determined and
recognized in the books of accounts:
(a) At the time of purchase of goods (b) At the time of sale of goods
(c) At the end of the year (d) None of these
(xv) Which ratio indicates a firm’s ability to pay current liabilities in the
shortest possible time?
(a) Current Ratio (b) Equity Ratio (c) Debt Ratio (d) Quick Ratio
(xvi) If we add the average number of days to turn the inventory over and the
average age of receivables (in number of days), we arrive at:
(a) The company’s fiscal period
(b) The sales volume of the business
(c) The company’s operating cycle
(d) Nothing meaningful